Advice

I’m a regular blog reader and huge fan of your educational Greaterfool.ca blog. My wife and I live in BC (Vancouver) and are hitting our 30’s. We’ve been renting for almost a decade and are patiently waiting for the market to hit the bottom. While we’ve sat back for years renting (and saving), at the same time, noticing the local housing market balloon to unsustainable numbers, sometimes when I read about your ongoing ‘real estate doom/gloom’ forecast (and albeit a ‘bang on’ forecast), the real $100 (plus HST) question is this: “Well, when is it the RIGHT time to BUY?” — Alex

It’s hard to tell how many people come here seeking that answer, as opposed to those merely infatuated with my swarthy magnetism. This blog is a daily column – it’s rolling history. So there are no answers, only guidance. I’m always amused at those critics who storm in and throw a 12-year-old comment in my face to prove I’m fallible. Like that was ever in doubt.

All we can do is peer at the swirl of events and trends around us, apply logic and experience, and plot a reasonable path. Should you buy real estate now? There are two answers to that.

The first depends on you. This is why the GreaterFool crack team of technical analysts, who couldn’t get a decent babe between them even if they flossed and dressed, came up with the Rule of 90. Simply put, deduct your age from 90 to determine what percentage of your net worth should be in your house. So a 30-year-old might reasonably have 60% in real estate and a 60-year-old just 30%.

The premise is simple. Don’t buy a house if you can’t afford one. Reduce real estate risk systematically as you get older. Make sure you always have diversification. And if you’re feeling horny in the middle of a house bloat, get a hot date instead. Or, in the case of a technical analyst, a puppy.

This brings us to the second answer, which is all about market conditions and the rolling history aspect of this pathetic blog. Real estate costs a stupid amount of money, or involves taking on life-altering debt. That’s why understanding where prices are going is critical, especially if you’re entering the market with scant resources (less than 20% down).

A case in point might be the Toronto condo scene. For two years I’ve been telling you to stay away (go back and read why). After the July 9th massacre, when F murdered long mortgages, gutted cash-backs and eviscerated debt ratios, it was simply too late. Anyone who bought after the summer of 2011, especially with 5% down, was screwed.

Even the latest numbers from the local real estate cartel confirm it. In the first two weeks of February condo sales in 416 tumbled 14.4% while prices dropped 8.4% from the same time a year earlier. Imagine what this means for the average $355,000 unit bought with the average 5% down. With closing costs (including CMHC premium and double land tax), the mortgage is $355,524, after the $17,750 down payment. But the current value of the unit is $29,820 less than last February. So, you end up owing $355,524 on something with a market value of $325,000, after spending $17,750 – plus monthly fees and a premium cable TV package with access to the Suicide Channel.

And to sell it you must pay another $16,000 in commission, plus a mortgage break fee. Total loss after a year: a minimum of $65,000, or 18% of the original condo price and 366% of your down payment. Did Mr. Lamb tell you about that?

Now here’s Aman Bhangu, a dude who must be an engineer because spreadsheets arouse him. Every month, he just told me, he plots the Teranet data and dives deep to uncover market trends. Last night he sent me the latest analysis. “The composite index is down 5 straight months,” Aman concludes. Among his key points:

Vancouver: down for 3 straight months, but it would have been down for SEVEN straight months had it not been for the minor upward blip in October. In total, prices have fallen over 5% from the highs and compared to the highest January sales pair since 2004 – which was in January 2004, sales pair volume is down 61%. Even versus an average January from 2004 onward, Vancouver sales pairs are down 44%.

Calgary: All this talk of a price resurgence in Calgary is rubbish. Calgary has declined for two straight months and has had sales pair volume decline in a straight line every month for 7 months (there has been no seasonal pick up just a downward trend). Prices are down 7.5% from their all time highs. Sure, prices are up 4.29% YoY, but since July prices are virtually flat. That 4.29% uptick took place at the start of the previous year and is old news.

Toronto: 4 months of price decline – off from the all time highs now – 37bps MoM decline. I thought Toronto would be worse for volume – this price decline is on higher than average seasonal volume. I’m expecting Toronto to be the last hold out in Canada for the price correction.

So, Alex, there ya go. If you can afford to buy a Van house in your thirties and still have a third of your assets elsewhere, go for it. But understand the place will likely be worth less in a year. If you have to throw everything you’ve got into a down payment, so real estate equals 100% of your net worth, then it’s kamikaze time. Is this really worth the risk? And don’t delude yourself the way so many people do, saying, ‘well, we’re going to live there for 30 years, so it’ll all work out.’

I heard some places in Vancouver are down at least 30% but I think it will be a more slower drop from here. I think that another 15% to 20% drop is coming over the next 24 to 36 months. So save more of a downpayment if you really are looking at buyinf but review your personal situation carefully before you proceed.

This is not over yet and it will take some time to hit near the bottom of real estate prices. if you can get to within 5% of the bottom in Vancouver real estate prices you are doing great. I know you have been waiting for 4 years but have some more patience and save the most you can so you will not have such a big mortgage and you can have more monthly cashflow for investments in TFSA’s,RRSP’s, non-registered accounts.

The right time to buy is clearly you have found the right home at the right price as RE bottoms out and is about to rise at a level that will be better than your return if you rented and invested.

There are about 114 variables for one to consider including family stability, children, job security, investment stability, neighborhood trends, municipal, provincial and federal incentives and disincentives among others.

All 144 should be studied while RE is slowing.
I would suggest that you make a imaginative move today and check on it in a year to see if you have what it takes as a RE and lifestyle soothsayer.

The Rule of 90 is great. The other advice I’d add, is that any time it is cheaper to rent than buy (like now) then waiting and saving almost certainly beats buying financially (obvious I know). So wait until the rent versus buy equation flips (like it has in the US) or until renting is cramping your style too much (spouse, kids, hassle, etc.), but in the latter case be fully aware that you’re “throwing money away” for lifestyle reasons.

Have been in our house for 26 years and counting. Likely not the average now. Don’t need bigger or better. Don’t have the income to support living on top of the hill but lots of folks convince themselves they do and are entitled. LOL

RE – GTA read today (Ithink it was the Star) that mid February 2013 to mid Feb 2012 comparison:

1. Sales are down;
2. Prices are up;
3. Listings are down.

Based on the same article:

1. Condo sales price down about 8%;
2. SFH up about 4%

Pretty much as I called it and I expect continuing pressure on condo market with more price correction for some time.

I am not so sure that I caled it right by predicting a flat market for SFH – there is a real possibility for some minor price appreciation due to constraint supply.

More and more reports pointing to boomers expected to live longer, fewer savings so will have to postpone retirement….and even those with govt defined benefits deciding to double dip.

It looks like the boomers are about to mess up all those nice models predicting that by the late 50’s early 60’s they would be dumping RE as they retired……potentially will be working into their late 60’s so shift those curves by 10 years…..and more pressure on the younger generations to find good employment opportunities….

I agree with Garth this is the time to be in a balanced portfolio of securities and focus on yield……about a year ago – today start thinking market pull back as an opportunity to put new money in these type of portfolios…..

Alex, my 40 yo friend bought a North Cambie St. corridor 80 yo tear-down bungalow at the very peak March 2012 for $1.5 mil. He spent another $100k to renovate to a livable condition. There are now two exact duplicate 80 yo house/lots one block North and one block West of him in “move-in” condition with nice landscaping and s/s appliances selling for $1,200,000. A 25% drop in 12 months, wait another year and you too can buy an 80 yo bungalow for under $1,000,000!

Garth, there are many ways couples can rationalize affordability. Like if they want to have a few nice things, couple kids, a trip every year and not work until they are geriatric, then yes now is not the time to buy.

But if you want to be a selfish DINK, eat cat food, read books at home and use the transit system and slave for the man until you drop, then now is the time to buy like mr Lamb says.

Funny, I was just thinking about that (the last condo bubble), and the havoc it wrecked on the West coast. GAWD, people really do have short memories. There was also a leaky condo scandal around the same time period.

Amen to the accurate comments about Calgary. Only propogandists with doctored numbers would believe there’s any sort of ‘resurgence’ there. The situation, at the street level, is dramatically different.

Why do people ask for advice from a random blogger (sorry to imply obscurity by calling you random, Garth) on decisions that affect their financial well being? An unscrupulous blogger might recommend investing in shares for an Amazon stronghold. Click the Paypal(tm) link to invest! Double or triple your money! (eyes rolling)

Nice advice, but not very practical, where on earth do you want those alpha guys and zexy wifes to live? In dumpster apt boxes with SHARED LAUNDRY ROOMS and bed bugs still alive after taking a bath in those machines? Rats and cockroaches, the high kanadian (post-collonial) RENTAL Standards with zuper-not-so-kool maintenance staff, that are never covered on HFTV nor CTV (the HIDDEN FACE of TORONTO)? When is the last time, baby, you had to fill a “maintenance order” and when was fulfilled if ever? may I ask?

#241 Daisy Mae on 02.20.13 at 10:08 pm
138Doug in London: “Boomers turned out to be the first-ever bunch of self-absorbed, birth-controlled hedonists who never got around to replacing themselves.”

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‘Boomers’ are not responsible for their numbers. Constantly blaming them for our woes is becoming very tiresome.
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So very true Daisy May. I’m so sick of everyone blaming the boomers. I & most of my friends worked our ass off as teenagers & then adults. We didn’t have & could not afford the kind of technology that the younger generation seem to thing it’s their God given right to have. I don’t have a cell phone. I grew up with 1 B&W
TV in the living room & 6 of us would sit on the floor watching Ed Sullivan Sun. eve.

And, I paid into CPP almost since it’s inception.

It’s not my fault that the global financial situation is so screwed up. Blame it on those that created it.

Nice advice, but not very practical, where on earth do you want those alpha guys and zexy wifes to live? In dumpster apt boxes with SHARED LAUNDRY ROOMS and bed bugs still alive after taking a bath in those machines? Rats and cockroaches, the high kanadian (post-collonial) RENTAL Standards with zuper-not-so-kool maintenance staff, that are never covered on HFTV nor CTV (the HIDDEN FACE of TORONTO)? When is the last time, baby, you had to fill a “maintenance order” and when was fulfilled if ever? may I ask?

My Practical advice to such fellas was: if u do not have 33-50% down, don’t buy in next 5 y, but go out of the friking apt. buildings in the city and lease, pay 2000-2500 a month for a renovated town in a zuper-area with top schooling, and don’t forget to give those places a taste of immigrandos, too, baby!

Just a little shocked at prices in Victoria.
They are selling 800 sq ft one bedroom condo’s at the bottom of busy Douglas St. for $400,000 to $500,000.
Shoeboxes at best and noisy traffic as a bonus.
As stated ‘this will not end well”.
Living proof that greater fools still abound.

I sold my condo in 2011, and put the money into CIBC Wood Gundy which has it invested in some stocks, some mutual funds, a bond fund, and an index fund. I know nothing about investing. Is this a good place to leave my money? I have no idea how the fees are paid.

I know of plenty of people getting the axe in Calgary. Others are very nervous. Commodities are showing signs of having peaked. The provincial budget on March 7th is not pretty, and it does not cut as much heavy management as Wild Rose would. Still people in Calgary think its different. A one industry town always has booms and busts, the busts are just as memorable as the booms.

It is a common and unavoidable question. People naturally want to know. When? They need certainty. But if Garth, or anyone, knew WHEN, they’d be a member in the very exclusive and rarefied club of clairvoyants, able to see the future, currently numbering zero.

So when as in date and time, is a fool’s errand. Anyone who claims to be able to tell you, is scamming you.

When as in conditions, now we’re getting somewhere. The easy answer is when renting is cheaper than owning. Even if house prices continue to decline, every month that you own in this scenario you are coming out ahead of renters. Prices cannot continue to fall much lower than this, because investors will step in to buy well priced properties they can rent out for a profit. Rents ultimately support house prices, just like earnings support stock prices. They can only diverge for so long. Long term you cannot go wrong with value.

Conversely, when it is more expensive to own than rent, owners are falling behind renters every month they own, unless they are able to sell for much more than they bought to make up the difference. And after property taxes, maintenance/upkeep, transaction costs, renovations and assorted operational expenses, the difference is much larger than they might believe.

Will prices ever fall to that level? In some places, they definitely will. In others, they will remain stubbornly high. And to dispel the last false hopes, if it is well out of your range today, it will continue to be out of your range.

Garth, Great picture. After reading your advice, and doing other research on CPP along with some number running (with that handy online calculator) my husband chose to take his CPP early. We’re going to either roll into a simple, conservative investment vehicle or a good LTC policy. His friend also read your CPP posts and chose to collect early to help pay off some debt.

Garth, those critics do not challenge you on your real estate views (I think we all agree where that industry is heading), but rather your views on equities, the bond market, deflation, and that infamous “7%-return balanced portfolio”.

#28 MarcFrom Ottawa
“Precious metals are taking a shellacking. The gold bugs will be quiet today.”

-Gold and Silver are not going to rise until 2015 when the next Sovereign Debt Crisis arrives. And rise they will to lofty heights.
-Real Estate is going to continue to collapse in the United States after this technical rebound. This is called the flush. Big money moving in[The Fed] to take toxic assets off the balance sheets of the banks and place them onto the individual private investors and taxpapers. This is why they are once again lending with ‘0 Down’ and low rates to almost anyone. Once this tricky little shuffle is complete the housing market will collapse once again. Only individual taxpapers and private investors will be holding the bag. Thus the major banks will not have to show a loss when marking toxic assets to their balance sheets. Accounting BS101.
-Real Estate and the economy of both the US and Canada will continue to decline all due to one major thing. [DEMOGRAPHICS]. Babyboomers peak spending years occured in 2007 in the US and 2011 in Canada.
In every generation one hits their peak spending years at approx. age 46. As an example Canadas babyboom lasted from 1945-1965. The last of the boomers turned 46 in 2011. We are now in corrective mode.

How will you know when real estate has bottomed? Just look at a year ago, when all the “experts” were predicting that U.S house prices would stay flat and the country’s economy would stay in the doldrums forever. That’s a sign of capitulation, when most people have given up. Roll the clock back 18 to 20 years earlier, I remember where someone wrote an article about the negatives of real estate titled: A man’s home is his hassle. Do you see the trend so far?

Now, going forward, when you hear people in Tim Horton’s bellyaching about what a losing deal home ownership is, and there are many articles in the papers or magazines (some people still use this antiquated technology, don’t they?) saying the same thing and recommending you NEVER buy a home because it’s such a bad investment, that’s a sign of capitulation and time for some serious house hunting.

“And don’t delude yourself the way so many people do, saying, ‘well, we’re going to live there for 30 years, so it’ll all work out.’

Trust me, you won’t.”

This I believe is an under appreciated factor in all of this. The nature of work is changing, and the number of permanent full time jobs is contracting while short-term contracts are expanding. In such an employment environment, why would anybody in their right mind buy a house? Even if there is any price appreciation, it’s easily erased by having to move every four years (if said person is truly chasing income opportunities).

Me, I’m getting off this contract rat-race and starting my own business. I think it’s now the only way to get some stability in life.

–
“. . . get a hot date instead. Did Mr. Lamb tell you about that? Or, in the case of a technical analyst, a puppy, plus monthly fees and a premium cable TV package with access to the Suicide Channel who couldn’t get a decent babe between them even if they flossed and dressed, as opposed to those merely infatuated with my swarthy magnetism.” — That was a mouthful! It would be good to see Mr. Lamb vs. a puppy in the WWE. Chances are he would be flattened by his own BS.
*China and the US$ from a UK perspective; Gold Crunchie Bars Tastes great and less filling, Gold Mugging“The short version is that the deliberate use of paper-gold to hammer gold prices is clearly demonstrated, to keep gold prices down to protect the stock market and to make it cheaper for the Fed to buy back gold for Germany.” wrh.com, and Buy Gold Pretty please; TICK Note the word sudden — could be co-ordinated; Bulgaria“I will not participate in a government under which police are beating people.”;The wealthy are taking the ordinary person’s money away; 1931 Currency wars then and now; Change is in the offing for big biz.; Young Entrepreneurs From this to this; Inflation IMF and Russia; Zombie 4closures;Squeamish US Fed.
*Depop. of US citizens has begun; Sign Of The Beast Giant Komodo dragon; McLaren Supercar 903 hp; 4:55 clip Control freaks of the western m$m; Cyber War The world is rapidly deteriorating; Kannaduhh’s Cellphones Becoming like Amerika; Anonymous or Anonymous“Except that one group claiming to be Anonymous is now saying their name has been used by what appear to be Agents Provocateurs.” wrh.com. Sounds like CIA – Mossad op.; 3:38 clip“This is the power claimed by kings and tyrants!”Broke Dictatorship See headline; UKIP Separating the UK from the EU, and joining it with Israel, but Hypothetical Question Iran, America and Israel; Antarctica Apparently, we will all be living in igloos shortly, and the Arctic Melt update;Low Flying Aircraft Pix in; The Fourth Amendment Americans are having their civil liberties stolen very quickly; Addictive Junk food is no different from cocaine or heroin; Monster-santo won, the 75-year-old farmer lost; 1:31 clip Mt. Etna erupts. Goes with the times.

You are even more tedious than the first post trolls. At least I can laugh at them. You are just, well, boring and repetitive.

===================

I appreciate the time you took to: 1) read my stimulating note; and 2) respond with your opinion … which, I might add, is totally and unequivocally horse sh++ … however, my task did get your neurons working for a change.

By the way, you appear somewhat simple minded if you find humour in one word … “FIRST” … get some help.

#52 Doug in London on 02.21.13 at 12:17 am
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21 straight years of property price decline in Japan. What is now happening in Canada is historic and without precedence. This is the deflation of a massive real estate/credit bubble. It is not like 18 years ago in any shape or form. This will cook real estate for a generation or two. Japan has tried printing money many times in the past 15 years or so to get people to buy back in but once bitten twice shy. Analysts try to mask it by calling it a liquidity trap but it is in fact the continuing collapse of the bubble. You cannot burn so many so severely and reasonably expect them to jump in again in their life times no matter how little respect one may have for so called sheep.

The CEO of a U.S. tire maker has delivered a crushing summary of how some outsiders view France’s work ethic in a letter saying he would have to be stupid to take over a factory whose staff only put in three hours work a day.

Titan International’s Maurice “Morry” Taylor, who goes by “The Grizz” for his bear-like no-nonsense style, told the left-wing French industry minister in a letter published by Paris media that he had no interest in buying a doomed plant.

“The French work force gets paid high wages but works only three hours. They get one hour for breaks and lunch, talk for three and work for three,” Taylor wrote on Feb. 8 in the letter in English addressed to the minister, Arnaud Montebourg.

“I told this to the French union workers to their faces. They told me that’s the French way!” Taylor added in the letter, which was posted by business daily Les Echos on its website on Wednesday and which the ministry confirmed was genuine.

“How stupid do you think we are?” he asked at one point.

“Titan is going to buy a Chinese tire company or an Indian one, pay less than one Euro per hour wage and ship all the tires France needs,” he said. “You can keep the so-called workers.”

etc. etc.

==========================

See : there are always opportunities out there…

I suggest move the plant to Quebec.

PS: The laid – off French workers would have the proper credentials to work in the Civil Service.

Fellow Blogger,
The right time to buy in Van West was in February 2009. If you bought then and sold in April 2012, you would be laughing all the way to the bank with money falling out of your pocket. Van West appears to be on a downward trajectory just now, so in my view, buying now would not be a good idea. Just my views, not an expert.

I knew a dog named Marley that looked exactly like that dog. My children loved him. He was a great dog. He was put down a day or two ago at the tender age of 6 with advanced stomach cancer. Great dog, exceptional character in every sense of the word.

I always say that if I was forced to choose between a dog and a cat, the dog wins hands down. If truth be told, I think cats are way easier to take care of, especially in the city. I have not had a pet in a long time because it is such a drag when they die. My kids are pestering me all the time for a pet but I really do not want to get one.

#13 Victoria (the original) on 02.20.13 at 10:38 pm
There still seems to be a lot of building going on in Victoria. I know a builder who just bought 8 lots (tear downs) to build for very expensive townhouses $million plus.
_____________________________________________
Good luck with that. Most of the show offices for developers haven’t re opened since Christmas as nobody is showing up. Buildings in Colwood are finished and empty, the one at Johnson and Cook is pretty much dead as well.

#45 Devore on 02.20.13 at 11:46 pm
And to dispel the last false hopes, if it is well out of your range today, it will continue to be out of your range.
………………………………………………………..
I think you have some false hopes. Japan’s real estate on the whole has become some of the most affordable in the world, a massive fall from least affordable which it once was and Canada’s now is (are very close to least affordable). Do not buy now, or for the next few years. It is all going to be very different for sure. This is only the beginning. In fact it is barely the beginning of the beginning.

Lots of talk about gold. A smart investor who holds gold, merely has some for insurance, and the last thing he/she wants to see is the price going up. That is being properly diversified. Only a fool is “all in” on only one asset, like gold, or RE. No exception.

Of course gold is going to correct eventually. No commodity stays near its peak indefinitely. Even Goldie is aware of that. If/when QE finally ends down south, gold might lose as much as half of its present “value”. That would be a great time for me to purchase more.

The washing machine does not kill bed bugs, the dryer (heat) kills bed bugs. Besides, they’ve been infesting swanky condos, fancy hotels, office buildings, and any place with lots of traffic and transient residents.

Honestly, the stupidest question ever is when someone asks “is this the right time to buy real estate?” Gawddamnit! Have you people got a brain in your heads? It’s the biggest purchase in your life and you’re basing it on a yes or no answer? YOU’RE STUPID AND DESERVE TO LOSE YOUR MONEY! These people are the weak and sick of the proverbial herd and should be sacrificed to the wolves so the rest of us can survive, procreate. Oh, how I love procreating! Do you notice how poor people, unfortunately, are slow to spot opportunities, aka, stupid? Garth, you’re a great guy doing great things but you can’t save everyone. Everyone else, if someone asks you if they should buy or not, do the collective population a favour and tell them to buy.

Alex – A large number of studies have concluded that real estate bubbles take five to six years to unwind. So plan to rent for several more years.

“Bubbles in housing markets are more critical than stock market bubbles. Historically, equity price busts occur on average every 13 years, lasts for 2.5 years, and result in about 4 percent loss in GDP. Housing price busts are less frequent, but last nearly twice as long and lead to output losses that are twice as large (IMF World Economic Outlook, 2003). A recent laboratory experimental study[3] also shows that, compared to financial markets, real estate markets involve longer boom and bust periods…”

People seem aware of the need for literacy, but numeracy is left in the cold. We need math for exactly the kind of logical, daily challenges like buying a house. The answer to “when is a good time to buy or sell” is when the numbers make sense. Add in some understanding of financial risk and the reality that money is not fungible in real life (the dollar that keeps the heat on is far more valuable than the ten dollars that take you out to dinner in a restaurant) and you can readily do the math, ponder, run the numbers again, and eventually decide when to make a move. As for me, recently re-decided not to sell and buy a bigger house. The math didn’t make sense and there’s a workaround for the kids’ schools. Selling and renting doesn’t work as a life choice right now, staying put is where it’s at. I should take some of the extra cash and putting it aside for advanced math tutoring for the kids.

From what I gather, Garth has been forecasting a steady and prolonged RE decline, not a crash. So if you’re waiting for a true bottom, it won’t happen for years, maybe even a decade. Being born into a crazy world shouldn’t stop you from freely living your life. Get yourself a place that you’ll enjoy, if you can afford it.

Took my 4yr old to the autoshow yesterday. Expensive day but worth it. For an economy in doldrums there looked like an abundance of potential purchasers. Like the new Rav Limited. Doesn’t feel like a corolla inside anymore. As for my son, he got to sit inside a gated car worth more than my house. Pays to be a cute happy kid. Me, I was holding my breath taking pictures of the event. Still lots of solvent, good people out there. Best to leave the anonymous freakshow here.

In no way is the fixed income portion going to be able to repeat what it has done for this portfolios return past ten years, in the next ten.

We are going to need the growth portion to carry its weight.

With no growth in the economy(at least right now and as projected by our host going forward) best of luck with vaunted 7% return expectations.
Current FI portion yield = 4.6%, then add growth. Of course if you restrict yourself to Canadian companies (as most Canadians do) your returns will be lessened. Balance is only one of three key portfolio elements, as you forgot diversification. — Garth

….and the trailing-edgers, gen-xers, gen-yers and millenials are facing one of the worst job markets ever, with ever-dimming prospects. Competition abounds for the lowest-paying, mind-numbing jobs, to which can be added legions of wrinklies needing to top-up their incomes.
Correction mode is here for a good while to come.
Debt is so destructive.

“I’m always amused at those critics who storm in and throw a 12-year-old comment in my face to prove I’m fallible. Like that was ever in doubt.”

The reason they throw those 12 year old comments at you Sir Garth is because they don’t expect the bearded mystic oracle, all knowing, all wise, soothsayer without equal, financial prognosticator without peer, debunker of gold huggers, parliamentarian peckerheads and peckerettes, gifted financial tea leaf reader, crystal ball gazing luminary, visionary leader, Harley riding badass, former minister of National Revenues, sage to the world’s central bankers, former right honourable parliamentarian, NYT best selling financial author, lone voice of reason in the financial wasteland of Canada to be wrong!

What about the simple Rent Times 100 Rule? If a place can be rented for $1,000 a month, its value should be $1,000 x 100 = $100,000. Anything more is too expensive and it´s better to rent. Anything less is a deal.
Replaced with the rule of 800. — Garth

#55 It’s different here (Calgary) on 02.21.13 at 12:46 am Here is a link on Calgaryhttp://www.creb.com/public/seller-resources/housing-statistics.php
Total sales in January 2013 were 15% higher than January 2012
There was a drop of 31% in number of active listings
Days on market was down by 17%
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That was the boom and then comes the bust March 7th when the budget is released.

I read this blog all the time and I get it. I really do. However, the idea of buying is always nagging because rents are stupid high. The feeling that you’re just flushing your money down the drain by renting is nauseating.

You might find that the financial advice you get is not what you bargained for. Check the education and credentials of your ‘financial advisor’ before investing…..anything less than full qualification can get you into trouble.

I’ve been a professional investor for thirty plus years….anyone who tells you that he’s got things under control and that any sort of average or guarantee applies when dealing in financial markets is out to lunch.

This is a business of individuals doing thier homework…at the end of the day you can rely on no one…..because there is no perfect system. The only people who have a guarantee are those who ride off into the sunset on the backs of the taxpayers.

Hi Garth,
Thank you for blog. May I ask a question about the Rule of 90. You state “deduct your age from 90 to determine what percentage of your net worth should be in your house”. Could you clarify the ‘net worth’ please?
For example. I’m 40 years old. 50% of my net worth should be in my house.
I have 100K savings. No house. Let’s assume I buy a house. 250K. Down payment is 50K. 200K is mortgage. After that I have.
50K in savings, 200K in debts, 250K in house. The net worth is 50K +250K -200K=100K and 50% of net worth is in house.
Is this sample correct to illustrate you Rule of 90?

#46 Freebird on 02.20.13 at 11:49 pm
Garth, Great picture. After reading your advice, and doing other research on CPP along with some number running (with that handy online calculator) my husband chose to take his CPP early. We’re going to either roll into a simple, conservative investment vehicle or a good LTC policy. His friend also read your CPP posts and chose to collect early to help pay off some debt.

Thanks for posts.
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After reading Garth’s posts I convinced hubby to apply for CPP at 60. Now I just have to remind him AGAIN to apply for pension contributions in France before he moved to Canada. Every little bit counts.

The best time to buy is when someone can afford to pay cash and not have a mortgage at all ! – if more people stood their ground and did this – prices would fall back in line with reality. When you really think about it, two by fours, drywall cans of paint etc. are not very expensive.

As a Builder/Developer for over a quarter century, I would like to give my opinion on the current direction of the Canadian RE. market and the prospects of deflation over inflation.

In 1981, when I began building, interest rates were 19 percent and we were just trying to survive a massive inflationary cycle when US Fed Chief Paul Volker raised the rates to this astronomical level to wipe out inflation.
Condo prices in Toronto dropped in some instances over 75%. SFH’s dropped about half of that by about 1986.
That year rates began to drop and we put a lot of foundations in the ground.

By 1990 it felt as if someone shut the tap off. Sales dried up seemingly overnight. Purchasers walked away from deals and we suffered for six years with virtually no new construction due to our overbuilding with what appeared to be lower rates from almost 20% mtg rates from the beginning of the decade.

Other than the blip we had in 2001, then the other blip we had in 2008/2009, the only direction this market has seen has been up! I believe that is why some people, not in this industry have a problem with the cyclical nature of construction and how it relates to the overall economy. This is a feast or famine business. We sure have feasted for a long time, meaning the famine will be that much deeper and longer in nature.

I expect an average drop of at least what the Americans endured (32% on average with Toronto, Montreal, Vancouver almost double that). Those cities are the American equivalent of Miami, Las Vegas, and Los Angeles.

You are correct Mr Turner in that it is a new beast of deflation we are to tangle with moving forward. My assesment is that truly defining deflation as the reduction of the money supply, slowing down the velocity of money, but most importantly the reduction of credit. All of which currently exist in America. The destruction of dollars through R.E. devaluation. The value of all Residential R.E. in the US ( pre crash) was pegged at 42 trillion with the average decline of 32%. This was a dollar destruction of approximately 13 trillion. The Fed trying to re-flate the econemy with just over 2trillion is still a huge destruction deficit of dollars! Deflationary!
We have reduced the avalibility of credit and thus reducing the velocity of money(transactions). We have all the earmarks of a long deep pullback in everything construction related by this summer and into fall and winter of this year.

Diversify your income streams, get out of debt ( I know easier said than done), and divest of all non necessary real estate. I have done so as an insider to this industry in summer of 2012. Don’t wait, it will only cost you more later. This time is not different, we are going to experience something most have never seen, devaluations in the biggest assets we own. This should have happened in Canada ,when the US took the hit , but we only increased credit to disallow the creative destruction necessary to rebalance our econemy.

How about an article about the state of lending in the wake of the cap on high LTV lending at $600 billion. Are Genworth and other private lenders originating higher levels of loans now? What is the effect in the Mortgage backed securites marketplace? Is there any evidence of an uptick in defaults on these sub-prime mortgages?

Sorry Garth, should have broken down the sentence for you.
Solvent–people who seem to be able to afford a new car.
Good people, the guy who took my son into the gated car area and let him spend time with cars I would never purchase, ability to or not.
Thanks, Asse

I appreciate your concern, regarding my time constraints, however, just to throw a scare into you and those of you ilk, I’m retired … but continue to prescribe ‘hallucinogenic’ drugs (for myself … eat your heart out).

#65 Mr Buyer on 02.21.13 at 1:42 am
I always say that if I was forced to choose between a dog and a cat, the dog wins hands down. If truth be told, I think cats are way easier to take care of, especially in the city. I have not had a pet in a long time because it is such a drag when they die. My kids are pestering me all the time for a pet but I really do not want to get one.
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I’ll take a dog over a cat any time. Grew up w/both plus other animals. As a Xmas gift many years ago I gave hubby a baby black lab/shepherd mix. She had a shepherd snout but a lab body. What a fantastic, loving dog. She knew what time hubby was due to get home and go to the window. But, when she was PO’d with us she’d shit on the driveway, etc. When he/we traveled (always had someone to stay with her at our home) she would ignore him/us for a few days after.

It’s heartbreaking when you have to finally put an animal – really a family member – down.

Nowadays politicians are running economies and for them, the major concern is peoples standard of living, which, at least, by 20% supported with borrowed money. That’s why governments everywhere are trying to devalue their currencies, what is even more compelling for export oriented economies. How, under such circumstances, we can expect the prime rate increase and sensible decline in borrowing?

PS: I realize my posts are overwhelmingly an attraction which almost ‘forces’ a reader ‘not’ to ignore them … however, if they ‘get under your skin’ (which, by the way, is the intent), try desperately not to read them. I know, I know … hard to do, but if you are a ‘real man’ do it … otherwise suffer …

I think Al Gore is completely full of it, and any of his believers should take a look at the golf course in Arizona. Can’t watch WGC match play as they had a blizzard in the desert. Guess B.C.s carbon tax is doing its job at stopping global warming.

#95 Purple on 02.21.13 at 10:37 am I read this blog all the time and I get it. I really do. However, the idea of buying is always nagging because rents are stupid high. The feeling that you’re just flushing your money down the drain by renting is nauseating.
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It is a FEELING, as you correctly state. If you analyse the rent vs buy choice properly, you will have hard evidence that it is a misguided feeling. Your net worth will grow faster renting these days, provided you invest appropriately and do not spend beyond your means.

If that knowledge does not alleviate your anxiety, then you do not really get it, and remain a greater fool!

90 workers let go at Talisman and that’s just a start. As the price of oil drops to the 60 to 65 dollar U.S. area this year and natural gas breaks below 3 dollars Calgary will be the foreclosure capital of Canada along with Fort McMurray, Victoria and Vancouver. All you’ll see is keys left in the door and “in foreclosure” signs.

50% of net worth (90 – 40)= $50,000. This is the total value of real estate you should consider owning. Meaning the ENTIRE value of your house, not just your down payment. I know, where can you get a house for $50,000? But there it is.

Even Wal-Mart is going through a tough stretch right now. According to documents that were leaked to Bloomberg, Wal-Mart is having an absolutely disastrous February…

Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”

So what in the world is going on here?

The mainstream media continues to proclaim that we are experiencing a robust “economic recovery”, but at the same time there are a whole host of indications that things are continually getting worse.

Even global cell phone sales actually declined slightly in 2012. That was the first time that has happened since the last recession.

Perhaps it is time that we faced the truth. The middle class is shrinking, incomes are declining and there are not nearly as many jobs as there used to be.

Mort Zuckerman pointed this out in a recent article in the Wall Street Journal…

The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.

The untold story in Calgary is finally getting out and that is the entire province is suffering from a severe lack of planning in the oil patch. Chasing expensive oil sands crude and then landlocking it into the central U.S. instead of off shoring it first and supplying our own people down east first. Now the U.S. is experiencing an oil renaissance and the people who want our oil cant get to it.

And to call it oil is really stretch, liquified asphalt is a better term. Fracking is bringing up nice sweet oil from old reservoirs. The word is oil sands crude is sold at a $40 discount to the world prices which makes many projects in Fort Mac uneconomical.

The canadian industry faces some stark choices, either upgrade that crap oil where it stands or get it to the coast pronto or go back to chasing conventional supplies which Canada has lots of yet.

#118 Snowboid on 02.21.13 at 12:49 pm
Thanks for the tyee ready by Andrew Nikiforuk: The Big Shift.

lots of delaying and denying …although it seems to pay to be a czar

Have you read this?
Making a Killing: Oil Companies, Tax Avoidance & Subsidieshttp://issuu.com/platform-london/docs/making-a-killing
Oil company mega-profits are being made at the expense of the public purse, as youth centres shut, hospitals struggle and the queues at food banks grow. Companies like BP & Shell are receive major government support including direct subsidies and military and diplomatic services, but seem to pay very small amounts of UK tax in comparison to their global profits. At a time of both public service cutbacks and record-breaking profit-making by oil companies, this briefing attempts to bring to light these transfers of wealth from the public to the private sector.

50% of net worth (90 – 40)= $50,000. This is the total value of real estate you should consider owning. Meaning the ENTIRE value of your house, not just your down payment. I know, where can you get a house for $50,000? But there it is.

You are wrong. The equity in his house is 50K. His total net worth is 100K. Thus 50% of his equity is in his house. Which is exactly within the ratio.

Garth still thinks we are going into deflation? More and more evidence is starting to emerge that central banks all over the world are starting a currency war, printing to infiniti. Japan is devaluing its currency, New Zealand is now talking about doing the same to the kiwi dollar. Norway is talking about weakening there currency as are the swiss. Venezuala has just lost nearly 50% of its value over night. Argentina is having a lot of inflation, inflation in Iran is conservatively being reported as 26%. The Japanese yen has fallen over 10% in the last two months….

What makes you think that the Bank of Canada isn’t going to join in on the fun of destroying our dollar?

You are wrong. The equity in his house is 50K. His total net worth is 100K. Thus 50% of his equity is in his house. Which is exactly within the ratio.
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Sorry but he’s right. you are missing the point of the rule

i got a 1M house with a 950k mtge.
i got 50k in savings:50k equity
i’m ok?
not.

it’s about how much exposure you have to any asset class.

the rule means if you have a 500k house (paid or not), your net worth should be 1m.

“So here’s a rule of thumb appropriate for the times. Take 90 and subtract your age to equal the percentage of your net worth a house should represent. So for a couple in their twenties, it can be in the 70% range. For a Boomer in her sixties, it shouldn’t exceed a third. How to calculate net worth? All your assets minus all your liabilities – so home equity is on one side of the ledger and the mortgage on the other. Then divide in fair market value of your property.”

Just called a CA who did our taxes last year to see how much he’d charge us this year. I had always done them. Used Turbo Tax for years but was was confused about capital gains,etc. He straitened it out & also took advantage of something I wasn’t aware of. The money we’ll pay him is well worth avoiding the frustration that I experience each tax season.

#85 Asse: For an economy in doldrums there looked like an abundance of potential purchasers….Still lots of solvent, good people out there.”

Lots of assumptions there from viewing a small sample of people. Anyone who goes to that show might have more free coin than most, so they’re not representative of most. Some who seem like cash buyers may be financing. And some buyers might spend freely but they’re not saving a dime now and will be feeling the pinch later. I know a lot of people making six figures who spend every penny and more. They look extremely solvent, but the debt’s piling up and retirement is a fantasy.

The Gov is going to pay its debt back by collecting property tax from all the condos in Toronto. The more flats the condos have the better, the more tax is payed for the same patch of land. It sounds to me that is air tax, not land tax. What a scheme and we are buying it.

Overheard in a coffee shop today:
Giggly young thing (GYT): Yes. I told him I was pregnant the week after we signed for the new house.
Friend: So, have you sold your condo?
GYT: Which one?
Friend: You have more than one?
GYT: Oh, yes. We have one downtown, which we rent out and the one in Markham that we are going to rent out when we move into the new house.

#112 Dr Wayne: “PS: I realize my posts are overwhelmingly an attraction which almost ‘forces’ a reader ‘not’ to ignore them … however, if they ‘get under your skin’ (which, by the way, is the intent), try desperately not to read them. I know, I know … hard to do, but if you are a ‘real man’ do it … otherwise suffer …”

Garth, your blog is a woven tapestry of reality and soap opera; today I indulge in soap: dr wayne of unethical self-subscription hallucinogenic fame, the under skin remark, do you prescribe SC, IM, or IV? Stat or prn? (Sorry Garth, I couldn’t help myself, lol)

I would put more stock in the assessment as a benchmark (albeit not perfect by any means), than an “asking price” determined by a real estate agent on a “by gosh or by golly” basis.

Just my two bits on your observations of the math.
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I hate to agree with realtors, but he does have a point. The point is that 2-3 months ago this home prolly would of sold for up to 100k less. And now that the spring season has started, this home sells at a nice price for the owner.

2-3 months ago, I thought that these deep discounts in Van west would continue (so did Garth). Now things have stabilized. So if you look at the situation now, there is no crash but a slide is looking more likely. I still think buying now is crazy.

Taking about this, talking about that, the debt ridden governments all over the world will keep talking till kingdom come that doesn’t mean currency wars are imminent.

Gold and Silver should be held agreed, but for the long term and generally for those that are not in need of any income stream. Many people need income from their investments and for such good quality preference shares are better.

Raven is taken from Ravenda. Please check original Hudac Home Warrenty registration Ravenda and Ravenda Construction (reg. 1985) then check the Ont New Home Warrenty for Ravenda Homes Ltd. Development records for St Catharines Ont Welland Ont , will show my extensive development in those Municipalities since the late eighties. I own and run many other successful businesses in the Niagara Region.

We are early 40’s and bring in $150k/year. One kid out the door and another one only 13.

Should we buy the place with the nanny suite (for aging and almost destitute boomer parents, the grasshoppers in this tale), for $620k, 5% down. The payments are only $2750/month! It has granite! And stainless steel!

Mining The Moon
An Apollo astronaut argues that with its vast stores of nonpolluting nuclear fuel, our lunar neighbor holds the key to Earth’s future. However, before we mine it, we’ll need to determine who owns the moon?

Read more: Mining The Moon – Rare Minerals – Helium 3 – Popular Mechanicshttp://www.popularmechanics.com/science/space/moon-mars/1283056
Substantial quantities of tritium could also be extracted from the heavy water moderator in CANDU nuclear reactors….wiki
Current US industrial consumption of Helium-3 is approximately 60,000 liters per year;[26] cost at auction has typically been approximately $100/liter although increasing demand has raised prices to as much as $2,000/liter in recent years.[27]

Picking up where her predecessor, Mary Schapiro, left off, Walter is pushing to see those voluntary guidelines become mandatory rules. She expects that a new rule would require that the core technology of the exchanges, alternative trading systems, and clearing agencies meet established standards. They would also be required to conduct business continuity testing, and provide notifications of disruptions and other problems.

Walter said the Commission will be using some new technology of its own to better monitor high-speed transactions. Among those initiatives is the Market Information Data Analytics System, code-named MIDAS, which can capture all orders posted on the national exchanges, all modification and cancellation of those orders, all trade executions, and all off-exchange executions. She said it provides an “unprecedented aggregation of trading information data” that allows the Commission to better monitor and understand mini-flash crashes and detect illegal behaviors.

I saw this in an article about ‘zombie forclosures’ in the US. – Taht is where the bank tells the owner to vacate, due to pending foreclosure, then doesn’t actually go ahead and foreclose. The owner discovers several years later they are on the hook for taxes, exterior mtce. and HOA fees!

Mustapha Sesay, a 45 year-old father of two, thought he had lost his Brandywine, Md., home in 2008. But two years later, a debt collector called telling him he owed $70,000.

The holder of his second mortgage had never forgiven his debt — even though the lender holding his primary mortgage had foreclosed on the home. The next couple of years are going to be very interesting here in Canada

Typically the second mortgage holder is out of luck if there isn’t enough cash from the foreclosure sale to pay off both the first and second lien, said Cheryl Cassell, director of the housing counselor network for the National Community Reinvestment Coalition. But, depending on state law, second mortgage holders can sue homeowners to pay off the notes — even after they lose the home in a foreclosure or the lender can sell the debt to a collection agencies.

Surprising as this may seem, you would have seen an almost tripling of the value of your house (from $100,751 to $301,145) — more than 11 per cent per year from 2002 to last year — if it was in Regina.

Across the GTA the average house appreciated from $275,231 in 2002 to $497,298 last year, an almost 80 per cent increase over the decade, amounting to average annual gains of about 6 per cent.

…”Insurance companies say savers most likely to consider an index-linked pension tend to be wealthier and healthier than average. Therefore, they use a typical life expectancy of nearer 90.
However, a 65-year-old who lived 25 years would still be £14,473 worse off with an inflation-linked deal. Only if inflation was 4 per cent a year would the total payout break even against a fixed rate within that time….”

pension liberators?
A crackdown on predatory fraudsters who are costing hard-working savers hundreds of millions of pounds by offering illegally to unlock pension pots early has been launched. Thousands of people have been hoodwinked by unscrupulous firms who promise to give them access to their pensions prior to the age of 55, failing to tell them that doing so can incur a tax bill of up to 55 per cent.

“The average Canadian home has escalated 93 per cent over the past decade; individual markets experienced increases ranging from 62 per cent in Saint John (4.96 per cent compounded annually) to 199 per cent in Regina (11.57 per cent compounded annually).

Yet, despite the strong overall performances, five-year rates of return show no signs of being in bubble territory—and most definitely not in the often cited markets of Vancouver and Toronto. While gains in Regina, Saskatoon and St. John’s have been exceptional, house prices are playing catch up, given a stronger economic status and following decades of steady, but modest growth.”

Who the heck uses a five year rate of return to prove or disprove a housing bubble? Seems like only Remax, and that’s because they are grasping for straws to use some obscure indicator to try and disprove a housing bubble. And even with that, when that obscure indicator blows up in their face and shows a city like Regina which has experienced a 12.7% annual appreciation for an average house at at time when incomes have increased by about 3% per year, it only means that Regina is “catching up”. So no housing bubble, no worries, right? Right.

Why is Remax using some obscure 5 year rate of return stat and not something like, oh I don’t know, how incomes have grown compared to house prices? Well it’s simple, if they charted average house price and average income growth they would see a graph that would not be favorable to their cause. But luckily for them, I charted it for all to see.

From 2002 to 2012, we see that average income in Canada has increased by 31%, the average house price has increased 93%, while mortgage debt has increased a whopping 148%. *(2011 and 2012 income number estimated with inflation growth from stats canada’s 2010 income number)

If you really need to buy a primary home (buy a sfh, that is), I would suggest a predatory offer. Walk in with an offer 10%-15% below assessed value (or 10-15% towards closing costs), offer conditional based on inspections, offer to move in within 30 days. You will still lose money as prices will drop over time but you will be better off than other greater fools.

I hate to agree with realtors, but he does have a point. The point is that 2-3 months ago this home prolly would of sold for up to 100k less. And now that the spring season has started, this home sells at a nice price for the owner.

The question is: Are realtors disclosing price history or just showing buyers the last MLS list price? Why would a buyer pay 100K more if they seen the price was 100k less 2-3 months ago?

The people who advocate gold are literally one yellow brick short. Do you think in a monetary collapse you are going to stroll around with your coins and actually purchase anything. Where are you going to store it – in a bank vault right…thats the first place that it will get confiscated from.

The ultimate hedge is land if you are sacred of a collapse. Land holds value, pays you a dividend and waits for you to use if to survive post collapse if you really needed to.

#133 International man. Take note. Garth says we’re in deflation and inflation. The things we need to live [food and energy, for example] are going up and the things we want but don’t need are in decline.

#62 Dr. Hoof-Hearted We must be careful here. Those Frenchies have the third largest nuclear arsenal we know of. Some time after WWII they were aimed at the USA. When allied with the GDR a most dangerous group.

Thank you for the admission, oh FOMC member. And to think just 4 years ago anyone accusing the Fed of using its “invisible hand” and doing everything in its power to solely focus on the stock market was labeled a “conspiracy theory” crackpot. One wonders what other “conspiracy theories” will be admitted by the Fed as fact in another four short years?

@Mr. Buyer, post #61:
You make some good points about the state of the real estate bubble. As for how long the bust will last and when the bottom occurs is anybody’s guess, and it could be longer than for the U.S. market. It’s never easy to time bubble tops and subsequent collapse bottoms. My crystal ball is broken now, but it never really worked that well at any time so I won’t offer any predictions. However, I believe that a bottom will occur sometime in the future (although at different times in different markets), as it did in the U.S. last year and the signs were there to indicate it for those who were paying attention. Patience is a virtue, and those who are patient and wait it out will be rewarded eventually.

#154 not 1st on 02.21.13 at 5:58 pm The people who advocate gold are literally one yellow brick short. Do you think in a monetary collapse you are going to stroll around with your coins and actually purchase anything. Where are you going to store it – in a bank vault right…thats the first place that it will get confiscated from.

The ultimate hedge is land if you are sacred of a collapse. Land holds value, pays you a dividend and waits for you to use if to survive post collapse if you really needed to.
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If you were a billionaire and wanted to keep it that way in a falling currency what’s the quickest and easiest way to do that. Thats right get gold – holds value, doesn’t tarnish and is transacted in moments, when a currency crisis happens it happens fast!

The only currency crisis is in your mind. This is not a gold blog. Be warned. — Garth

#164 jess — “However, a 65-year-old who lived 25 years would still be £14,473 worse off with an inflation-linked deal. Only if inflation was 4 per cent a year would the total payout break even against a fixed rate within that time….”

Well, one shouldn’t expect the inflation protection to be free. Most people who purchase fire insurance, life insurance, life annuities &c end up worse off than if they hadn’t, but they’ve limited their downside risk. Always shop around, though.

The question is: Are realtors disclosing price history or just showing buyers the last MLS list price? Why would a buyer pay 100K more if they seen the price was 100k less 2-3 months ago?
_______________________________

If everyone knew they could lowball 2-3 months ago, I’d think they would of. But they didn’t know exactly where the market was because sales history are guarded by realtors. Realtors will only show you sales that have multiple offers and then they’ll say, “see, no crash here”.

If I was buying 2-3 months ago in van west, I’d know where to start. It’s good to have a realtor friend who will give you access to their account.

The best time to buy is when someone can afford to pay cash and not have a mortgage at all ! – if more people stood their ground and did this – prices would fall back in line with reality. When you really think about it, two by fours, drywall cans of paint etc. are not very expensive.

I assume you are volunteering to organize the public? Good luck with that proposal.

#87 MAXX Move to the wasteland of Sk then. This land has ample opportunity. Problem is we natives don’t really like to work. We are somehow owed something. I’d hire a foreign worker anytime over a native kid. They show up, work when it’s needed and contribute. Fact is me thinks our kids will be working for them soon. They appear to be able to put aside immediate gratification for the betterment of their entire familly. Something we have lost in our me thinkin. Just sayin….

….”Today, modern agricultural practices diminish the wholesale drying experienced during the Dust Bowl, but extreme drought persists in the West. This is because the average temperature in the West has warmed at nearly twice the global average according to the Rocky Mountain Climate Change Organization. (8)

The golf course is at an elevation of almost 3000 feet, and Tucson is often cooler than Phoenix. That amount of snow is unusual.

Some areas in Phoenix received some hail, sleet or graupel – which is definitely not normal for this time of year (usually 22 C) – but all we saw was rain in the west valley.

It’s probably better to use the term climate change, as I believe global warming has an effect on weather in general, not just heat but increased storms. Have you noticed that sections of the US central and southeast seem to have ongoing storms now?

Phoenix has one of its’ hottest summers last year, and the forecast for first couple of weeks of March is 28-30 C or about 7 C warmer than normal.

Thanks to the recent release of information the Crown corporation Pacific Carbon Trust fought to withhold, we now know just how much private corporations received in public dollars to allegedly retire public-sector, greenhouse-gas emissions.

By far the most money paid by schools, hospitals and the like was for carbon credits bought by the PCT from one of B.C.’s biggest logging companies.

For “conserving” tracts of trees, PCT paid Timber West a tidy $5.6 million. The 2010 project has striking parallels to the scenario just described.

It rests on the claim that Timber-West “conserved” forests it otherwise would have logged. For this, the company sold 560,925 carbon credits to PCT. Because PCT holds a monopoly, public agencies were forced to pay PCT $25 for each of the Timber-West credits. The trouble is that on the open market that year, the average carbon credits sold for just $6. Thanks to PCT’s mark-up on Timber-West’s credits, our schools, hospitals and the like paid $14 million or more than four times the going rate.

Worse, in addition to lost services for school kids and hospital patients, that $14 million bought little if any climatic benefit. Here’s why.

Just as it’s a mistake to focus on the “additional” trees protected in that hypothetical housing development mentioned above while turning a blind eye to the size of the houses built, so it’s a mistake to focus narrowly on the trees Timber West allegedly saved while ignoring the company’s overall logging plans.

You see, Timber West told its own shareholders it had little interest in logging the trees it later “conserved.”

It also told those same shareholders that it planned to accelerate its logging elsewhere. More troubling, PCT knew such facts before cutting Timber West its cheque.

etc etc

================================

GHG’s are just a scam, a wealth transfer to NeoCons (aka Communists) aided and abetted by whacko Lefties.

#159 Penny Henny Tis true. Average prices have increased faster in Regina in the last 5 years than anywhere else in Canada. Middle Canada is cold but with lots of stuff people need. Sk also has 50% of the arable land in Canada. Don’t know what tomorrow will bring but this frozen wasteland has a lot of potential. Don Chrrey said it was the richest province in Canada. LOL The budget with some creative accounting will be balanced in 2013. How’s it goin in Ontario and Alberta eh? Where da ya think food prices going? This is good news for Canada and winter tire manufactures. Those of us that call Sk home know it is good here. We do howerver take a lot of winter vacations!

CP 24 ” hot property” a women calls in asking if a condo hotel or regular condo is a better investment to rent out today.

Then a clip of Mark Carney is showed where he warns that housing has a bit further to correct and warns Cdns not to get deeper in debt. Then both RE agents are asked to decipher what he was saying and from both sides of his mouth , the Italian one says that he meaning MC is warning to save and invest not just in home but other savings vehicles but then reminds that a rental property with 20% down wil be payed off in 20 years and is a good forced savings vehicle.

My thinking is this… especially in places like Vancouver. You have pent up demand in horny areas. That pent up demand involves renting out a suite in your own home. That now means you’re a businessman or woman. Hmmmmm, and here’s the kicker. This is where people rationalize running a business out of thin air. It’s a given. Why? Because that’s the only way you can afford to carry an overblown mortgage on the home. It’s overblown that most single family homes anywhere in Vancouver or Toronto are being hustled to the horny as “potential streams of revenue” or “passive income.” But that “passive income” serves overblown mortgages? Nah. No banker will come to that conclusion. Why are most single family homes in places like Surrey owned by multiple families? It’s the only way they can afford a proper home. Simply put, you must think of your own home as a moter hotel. It ceases to remain a “home” once you’ve decided to run it as a business or partner up with extended family members to co-own/co-habit a home and share the costs of running the home. For all prospective horny landlords, What’s the difference when you compare these models to renting for the sake of perceived home ownership. The banks own your home, until you’ve paid for it. That’s why you need renters. Owners in effect are renters from banks in these instances of grief panic stricken purchasing frenzies. I think they called that HUBRIS?

#152 jess on 02.21.13 at 4:13 pm wrote:Mining The Moon
An Apollo astronaut argues that with its vast stores of nonpolluting nuclear fuel, our lunar neighbor holds the key to Earth’s future. However, before we mine it, we’ll need to determine who owns the moon?

Helium 3 and tritium are all fine and dandy but in fact even a simple bog-standard lump of stone from the moon has so much potential gravitational energy relative to the Earth that it would be possible to generate energy simply by digging up any old lunar rubble and shipping it back to Earth — as long as it was done the right way.

I personally would not want to run a “business” out of my own home. But Horny folk masterbating to HGTV, feel the urge to buy in now and act like sheep. There are complete tear downs in places like Vancouver selling for ridiculous sums of cash no normal person would ever pay to live in even a tropical destination. But that it makes perfect sense to live in million dollar crack shacks in Vancouver? Get ready for the big shit sandwich out on the wet coast, because everyone will have to take a big bite. It’s called negative equity on your balance sheet when you owe more than you own. That’s a crisis and it’s here. Scamcouver is destined for failure.

“What are you, Smoking Man”?
You state you know me then call bullshit in a later post?
You have to stop trying to go after the person making the post if you don’t agree with their content. My intent to impart some personal experience to the Canadian masses in their plight to find some direction or path they can take.I only added a partial C.V. to lend credibility to the message I was making!They are crying out for help and diligently scouring any information to assess their position and make informed investments! Please don’t confuse this blog and its forthright posts. Assess the information, good, bad or indifferent, and comment if you feel so inclined on their Merritt!

I do thank you for your compliments, and your dry witticism! I do enjoy time down south, but watching the till is still my main occupation, so guys like you don’t try
to steal my business? Did you work for Ernie, or Mike E at Rona, before you moved to the promised land?

Glad to see an update on Winnipeg.
I checked the MLS map and, indeed there are no trendy waterfront condos plotted on the map on the west side of the Red river. Maybe their marketers are too snooty even for MLS.ca, but it would appear these condos have indeed all gone to rentals. Condo prices in Wpg seem to be at around 290 to 400/ sq ft. There may have been an over- building of condos along with an enthusiastic apartment-to-condo conversion trend in Wpg. Either that or the price point stalled like everywhere else with changes to financing rules.
I would think the trend seems to slowly shadowing the rest of Canada.
Should we sell and rent here?
Rents seem high here. Rental vacancies seem to be still low. If rental vacancies do increase due to the switch over of condo units to apartments, maybe it would be favourable to bail on my house. Keeping an eye on the trend.

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.